To Analyze Impact of Dollar On Price of Different Commodities.

EXECUTIVE SUMMARY
Our endeavor is to analyze impact of USD/INR on prices of different commodities

as they stand in the overall economical, social and demographic picture. The
impact in economical system is very much obvious and beyond any dispute as
commodities are themselves economical propositions. Commodities are any
agricultural or mining product which can be traded for cash in spot market and
futures exchanges. Commodity markets provide an avenue for their sale.
Commodity exchanges help in trading commodity in futures and option markets.
We have chosen the commodity market for his project work because presently, it is
the one of the most likely profitable investment area and having vast future scope
in India. Commodity market is also the investment like other investment. And
investment is not free from risk. There are low or high risk is available in every
investment. In the commodity market the risk like price fluctuation, increase and
decrease in demand and supply of the different commodity. But commodities are
also subject matter of our social fabrication. Any society comprises of two set of
people: Traders and Farmers. Commodities are affecting the lives of both set of
people. Their business practices and strategies are rapidly changing and
commodity market is very much influencing it. The commodity market also
fluctuate with change in supply and demand; hope, fear and greed; inflation,
interest rates, economic strength, currency rates; government policies, etc.
With the world embracing the commodity market trading on a large scale, the
Indian market obviously cannot remain aloof, especially after liberalization has
been set in motion this study was undertaken in C9 FINANCIAL PVT. LTD. In my
research work we include the objective of the study; introduction of how
commodity market is work, what is risk level of different commodity, their
fluctuation of selected commodity and dollar. Here, I have studied impact of dollar
on price of different commodities by studying the relation between dollar and
prices of different commodities like gold, silver, copper, nickel and crude oil with
the help of Karl persons co-efficient of correlation and I have also measured the
systematic risk by using beta.
Commodities market in India

India has a long history of futures trading in commodities. In India, trading in
commodities futures has been I existence from the 19 th century with organized
trading in cotton, through the establishment of Bombay cotton trade association
Ltd .in 1875. Over a period of time, other commodities were permitted to be trade
in futures. Spot trading occurs mostly in regional midis and unorganized markets,
which are fragmented and isolated.
There were booming activities in this market and at one time as many as 110
exchanges were conduction forward trade in various commodities in the country.
The securities market was poor cousins of this market a there were not many
papers to be traded at the country.
The ear of widespread shortages in many essential commodities resulting in
inflationary pressures and the toward socialist policy, in which the role of market
forces for resource allocation got diminished, saw the decline of this market since
the mid-1960. This coupled with the regulatory constrain in 1960. Resulted I
virtual dismantling of the commodities future markets. It is only un the last decade
that commodity future exchanges have been actively encouraged. However have
been than with poor liquidity and have not grown to any significant level.
A three-pronged approach has been adopted to review and revitalize this market.
Firstly on policy front many legal and administrative hurdles in the functioning of
2
the market have been removed. Forward trading was permitted in cotton and jute
goods in 1998, followed by some oilseeds and their derivatives, such as groundnut,
mustard seed, sesame, cottonseed etc. in 1999. A statement in the first ever national
agricultural policy, issued in July, 2000by the government futures trading will be
encouraged in increasing number of commodities was of welcome change in the
government policy towered forward trading. Secondly, strengthening of
infrastructure and intuitional capabilities of the regulator and the existing
exchanges received priority.
The year 2003 market the real turning point in the policy framework for
commodity market when the government issued notification for withdrawing all
prohibition and opening up forward in all the commodities. This period also
witnessed other reform, such as, amendments to the essential commodities act,
securities rules, which have reduced bottlenecks in the development and growth of
commodity market. Of the countrys total GDP, commodities related industries
constitute about roughly 50-60% , which itself cannot be ignored.
Most of the existing Indian commodity exchanges are single commodity platforms
are regional in nature, run mainly by entities which trade on them resulting in
substantial conflict of interests opaque in their functioning and have not used
technology to scale up their operations and reach to bring down their cost. But with
the strong emergence of national multi-commodity exchange Ltd, Ahmadabad
(NMCE), multi-commodity exchange Ltd., Mumbai (MCX), national commodities
and derivatives exchange, Mumbai (NCDEX), and national boarded of trade,
Indore (NBOT), all these shortcomings will be addressed rapidly. These exchanges
are expected to be role model to other exchanges and likely to compete for trade
not only among themselves but also with the existing exchanges.
MINISTRY OF
CONSUMER
AFEAIRS
FMC (FORWARDS
MARKET
COMMISSION)
COMMODITY
EXCHANG
NATIONAL
EXCHANGE
MCX
NCDEX
REGIONAL
EXCHANGE
NMCE
NBOT
20 OTHER
Figure No 2.1: Commodities Market In India

The current mindset of the people in India is that the commodity exchanges are
speculative and are not meant for actual user. One major reason being that the
awareness is lacking amongst actual user. In Indian, interest rate, exchange rate
risks are actively managed, but the same does not hold true for the commodity
risks. Some additional impediments are centered on the safety, transparency and
taxation issues.
DIFFERENT SEGEMEBTS IN COMODITIES MARKET

The commodities market in two distinct foams namely the over the counter
(OTC) market and Exchange based market. Also, as in equities, there exists the
spot and the derivatives segment. The sport market are essentially over the counter
market and the participation is restricted to people who are involved with that
commodity say the farmer, processor, wholesaler etc. derivative trading takes place
through exchange-based market with standardized contracts, settlements etc.
LEADING COMMODITY MARKETS OF WORLD

Some of the leading exchanges of the world are:
Table: 2.1 Leading Commodity Markets of World

No.
Global Commodity Exchanges
New York Mercantile Exchange (NYMEX)
London Metal Exchange (LME)
Chicago Board of Trade (CBOT)
New York Board of Trade (NYBOT)
Kansas Board of Trade
Winnipeg Commodity Exchange, Manitoba
Dalian Commodity Exchange, China
Bursa Malaysia Derivatives Exchange
Singapore Commodity Exchanges (SICOM)
10
Chicago Mercantile Exchange (CME),US
11
Tokyo Commodity Exchanges (TOCOM)
12
Shanghai Futures Exchanges
13
Sydney futures Exchanges
14
London International Financial Futures and Options Exchanges (LIFFE)
15
National Multi-Commodity Exchange in India (NMCE),India
16
National Commodity and Derivatives Exchange (NCDEX),India

5
17
Multi-Commodity Exchange of India Limited (MCX),India
18
Dubai gold & Commodity Exchange (DGCX)
19
Dubai Mercantile Exchange (DME), [joint venture between Dubai holding and the
New York Mercantile Exchange (NYMEX)]
20
London Metal Exchange
Regulators
Each exchange is normally regulated by a national governmental (or semigovernmental) regulatory agency:
Table 2.2: Regulators

Australia
Australia securities and investment commission
Chinese
mainland
Hong Kong
China securities regulatory commission
India
Security and exchange board of India and forward

market commission (FMC)
Pakistan
Security and exchange commission of Pakistan
Singapore
Monetary authority of Singapore
UK
Financial services authority
USA
Commodity future trading commission
Malaysia
Security commission
Securities and futures commission
LEADING COMMODITY MARKET OF INDIA

The government has now allowed national commodity exchange, similar to the
BSE & NSE , to come up and let them deal in commodity derivatives in an trading
system. The forward market commission (FMC) will regulate theses exchanges.
6
Table: 2.3: Leading Commodity Market of India

No.
Commodity Market in India
Multi Commodity Exchange (MCX), Mumbai
National Commodity and Derivatives Exchange Ltd (NCDEX), Mumbai
National Board of Trade (NBOT), Indor
National Multi Commodity Exchange (NMCE), Ahmadabad
Multi Commodity Exchange

Multi Commodity Exchange of India Ltd (MCX) (BSE: 534091) is an independent
commodity exchange based in India. It was established in 2003 and is based in
Mumbai. The turnover of the exchange for the fiscal year 2009 was US$ 1.24
trillion, and in terms of contracts traded, it was in 2009 the world's sixth largest
commodity exchange. MCX offers futures trading in bullion, ferrous and nonferrous metals, energy, and a number of agricultural commodities (mentha oil,
cardamom, potatoes, palm oil and others).
In 2012, MCX has taken the third spot among the global commodity bourses in
terms of the number of futures contracts traded. Based on the latest data from
Futures Industry Association (FIA), during the period between January and June
this year, about 127.8 million futures contracts were traded on MCX.[1]
MCX has also set up in joint venture the MCX Stock Exchange. Earlier spin-offs
from the company include the National Spot Exchange, an electronic spot
exchange for bullion and agricultural commodities, and National Bulk Handling
Corporation (NBHC) India's largest collateral management company which
provides bulk storage and handling of agricultural products.
In February 2012, MCX has come out with a public issue of 6,427,378 Equity
Shares of Rs. 10 face value in price band of 860 - 1032 Rs. per equity share to raise
around $134 million.
MCX is India's No. 1 commodity exchange with 83% market share in 2009
7
The exchange's main competitor is National Commodity & Derivatives

Exchange Ltd
Globally, MCX ranks no. 1 in silver, no. 2 in natural gas, no. 3 in crude oil
and gold in futures trading (But actual volume is far behind CME group
volume as Silver is traded in 30 kg lots on MCX whereas CME traded in
Approx 155 kg Lot size same in Gold 1 kg : 3. kg Approx and Crude 100
Barrels : 1000 Barrels on CME) and major volume in manuplated as there
in no strict regulation in Indian markets just to Excalate the prices of Shares
of company. Also the major volume comes from Arbitration Of CME and
MCX which is also not legal to do. As of early 2010, the normal daily
turnover of MCX was about US$ 6 to 8 billion
MCX now reaches out to about 800 cities and towns in India with the help
of about 126,000 trading terminals
MCX COMDEX is India's first and only composite commodity futures

price index
Table: 2.4: Multi Commodity Exchange

METAL
BULLION
Aluminium, Copper, Lead, Nickel,
Steel
Long
(Bhavnagar),
Steel Gold, Gold HNI, Gold M, i-gold, Silver,
Long (Govindgarh), Steel Flat, Tin, Silver HNI, Silver M, Silver Micro
Zinc
FIBER
ENERGY
Cotton L Staple, Cotton M Staple, Brent Crude Oil, Crude Oil, Furnace Oil,
Cotton S Staple, Cotton Yarn, Natural Gas, M. E. Sour Crude Oil, ATF,
Kapas, Jute
Electricity(Now delisted), Carbon Credit
SPICES
PLANTATIONS
Cardamom, Jeera, Pepper, Red
Arecanut, Cashew Kernel, Coffee (Robusta),
Chilli, Turmeric, Cumin Seed,
Rubber
Coriander
PULSES
PETROCHEMICALS
Chana, Masur, Yellow Peas, Tur, HDPE, Polypropylene(PP), PVC
8
Urad
OIL & OIL SEEDS
Castor Oil, Castor Seeds, Coconut Cake, Coconut Oil, Cotton Seed, Crude Palm
Oil, Groundnut Oil, KapasiaKhalli, Mustard Oil, Mustard Seed (Jaipur), Mustard
Seed (Sirsa), RBD Palmolein, Refined Soy Oil, Refined Sunflower Oil, Rice Bran
DOC, Rice Bran Refined Oil, Sesame Seed, Soymeal, Soy Bean, Soy Seeds
CEREALS
OTHERS
Maize, Barley, Rice, Sharbati Rice, Guargum, Guar Seed, Gurchaku, Mentha Oil,
Basmati Rice, Wheat
Potato (Agra), Potato (Tarkeshwar)
National Commodity and Derivatives Exchange

National Commodity & Derivatives Exchange Limited (NCDEX) is an online
multi commodity exchange based in India. It is a public limited company
incorporated on 23 April 2003 under the Companies Act, 1956. It obtained its
Certificate for Commencement of Business on 9 May 2003. It has commenced its
operations on 15 December 2003. NCDEX is the only commodity exchange in the
country promoted by national level institutions. This unique parentage enables it to
offer a bouquet of benefits, which are currently in short supply in the commodity
markets. The institutional promoters and shareholders of NCDEX are prominent
players in their respective fields and bring with them institutional building
experience, trust, nationwide reach, technology and risk management skills.
NCDEX is regulated by Forward Markets Commission (FMC) in respect of futures
trading in commodities. Besides, NCDEX is subjected to various laws of the land
like the Companies Act, Stamp Act, Contracts Act, Forward Commission
(Regulation) Act and various other legislations, which impinge on its working.
The NCDEX System

Every market system traction consists of three components i.e. Trading, Clearing,
and Settlement. A brief overview of how transaction happen on the NCDEXs
market.
TRADING
The trading system on the NCDEX provides a fully automated screen based
trading for futures on commodities on a nationwide basis as well as online
monitoring and surveillance mechanism. It supports an order driven market and
provide complete transparency of trading operations. All contracts expire on the
20th of the expiry contracts would cease trading on the 20 th of February. If the 20th
of the expiry month holiday, the contract shall expire on the previous trading day.
New contract will be introduced on the trading day following the expiry of the near
month contract.
CLEARING
National Securities Clearing Corporation Limited (NSCCL) underrates clearing to
trade executed on the NCDEX. The settlement guarantee fund is maintained and
managed by NCDEX. Only clearing member including professional clearing
member (PCMs) only are entitled to clear and settle contract through the clearing
house. At NCDEX, after the trading hours on the expiry data, based on the
available information, the matching for deliveries takes place firstly, on the basis of
location and then randomly, keeping in view the factors such as available capacity
of the vault/warehouse, commodities already deposited and dematerialized and
offered for delivery etc.
SETTLEMENT
Futures contracts have two types of settlement, the MTM settlement which
happens on a continuous basis at the end of each day, and the final settlement
which happens on the last trading day of the futures contact. On the NCDEX, daily
MTM settlement and the final MTM settlement in respect of admitted deals in
futures contracts are cash settled by debiting/crediting account of CMs with the
respective clearing bank.
MCX Stock Exchange
10
MCX Stock Exchange Limited (MCX-SXAT) is an Indian stock exchange. It

commenced operations in the Currency Derivatives (CD) segment on October 7,
2008 under the regulatory framework of Securities & Exchange Board of (SEBI)
and Reserve Bank of India (RBI). The Exchange is recognised by SEBI under
Section 4 of Securities Contracts (Regulation) Act, 1956. In line with global best
practices and regulatory requirements, clearing and settlement is conducted
through a separate clearing corporation, MCX-SXAT Clearing Corporation Ltd.
(MCX-SXAT CCL).
At the end of June 2012, MCX-SX had 750 members and saw participation from
707 towns and cities across India.
The Exchange received permissions to deal in Interest Rate Derivatives, Equity,
Futures & Options on Equity and Wholesale Debt Segment, vide SEBIs letter
dated July 10, 2012.MCX-SX was granted the status of a recognized stock
exchange by the Ministry of Corporate Affairs (MCA),Government of India on
December 21, 2012. It received commencement certificate from market regulator
SEBI for trading in new segments such as Equity, Futures and Options on Equity,
Interest Rate Derivatives and Wholesale Debt Market on December 19, 2012.
SX40
SX40 is the flagship Index of MCX-SXAT. A free float based
index of 40 large caps - liquid stocks representing diversified
sectors of the economy. It is designed to be a performance
benchmark and to provide for efficient investment and risk
management instrument. It would also help in structuring
passive investment vehicles.
Products
MCX-SXAT currently Rupee (EURINR), Pound Sterling-Indian Rupee (GBPINR)
and Japanese Yen-Indian Rupee (JPYINR). The currency futures contracts on
MCX-SX enable Indian Importers, Exporters, Corporate, Banks and other
participants to effectively hedge their risks arising out of volatile currency prices.
These contracts also offer a better flexibility than the currency contracts traded on
11
over-the-counter (OTC) market as the structure and pricing of an exchange-traded

contract is more transparent.
C9 FINANCIAL PRIVATE LIMITED

Money, its just not what it used to be
A. VISION OF THE COMPANY
C9 Financial Pvt. Ltd. Strive to be World Class Organization by providing
expertise and leadership in its fields and delivering high quality, value
added services to its customers with courtesy and respect.

C9 Financial Pvt. Ltd. Continually improve its services through the
optimum use of technology and systems, by collaborating partnerships, and
by being responsive to changing needs. C9 Financial Pvt. Ltd. Advocate
employee empowerment, decentralized decision making and responsible
risk taking as they are essential for a strong positive future.

C9 Financial Pvt. Ltd. grows by providing mentoring, encouragement and
learning opportunities, by communicating openly, and by challenging
themselves to excel. C9 Financial Pvt. Ltd. reward and celebrate success.
12
B. MISSION OF THE COMPANY:

C9 Financial Pvt. Ltd. is dedicated to providing total financial solution. C9
Financial Pvt. Ltd. wishes to establish successful partnership with its client,
its staff member, and its associates company, that respect the interest and
goal of each party.

Success will be measured by its client choosing it because of their belief in
its ability to meet or exceed their expectation of service, and expertise.

Achieving superior and consistent investment result.
Institutionalizing system-approach in all aspect of functioning.
Upholding highest standard of ethical values at all times.
C. VALUES OF THE COMPANY:

Passion Time Commitment Fidelity Respect
D. SERVICES PROVIDED BY THE COMPANY:

C9 Financial Pvt. Ltd. Provides a complete life-cycle of investment
solution in Equities, Derivative, Commodities, IPO, Mutual Funds,
Depository Services, Portfolio management Services, Life Insurance,
General Insurance and Income Tax Consultancy. It also offers personalized
wealth management services for high net worth individuals.
13
DEPOSITORY SERVICES
EQUITY & DERIVATIVE TRADING
ONLINE SERVICES
TECHNICAL RESEARCH
COMMODITIES TRADING
FUNDAMENTAL
RESEARCH
DIAL-N- TRADE
SHAR
E
PORTFOLIO MANAGEMENT
FIGURE NO 3.1: Service provided by the company

E. ORGANIZATIONAL STRUCTURE OF THE COMPANY:
14
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or om
M
E Cm
. pm
T
C
Slpoaehpajnyaana jennsyaehdyysM
r PM
eC as hahn anawPpag age lrneramer rai ra
H He ea ad d o of f t ht he e i ni nd du us ts rt ir ai al lu un ni ti t
E Em mp pl ol oy ye ee es s
FIGURE NO 3.2: Organizational structure of the company
F. ADDRESS OF THE COMPANY:
C9 Financial Pvt. Ltd.
2, Nilanjali Complex,
Near Gail Tower,
Anand-Mahal Road,
Surat-395009
G. CONTACT DETAILS OF THE COMPANY:
Phone: +91-261-3075054
Email: C9financial@gmail.com
Visit :www.C9financial.weebly.com
WHAT IS COMMODITY?
15
In economics, a commodity is a marketable item produced to satisfy wants or

needs. Economic commodities comprise goods and services.
The exact definition of the term commodity is specifically applied to goods. It is
used to describe a class of goods for which there demand is, but which is supplied
without qualitative differentiation across a market. A commodity has full or partial
fungibility; that is, the market treats its instances as equivalent or nearly so with no
regard to who produced them. "From the taste of wheat it is not possible to tell
who produced it, a Russian serf, a French peasant or an English capitalist."
Petroleum and copper are other examples of such commodities, their supply and
demand being a part of one universal market. Items such as stereo systems, on the
other hand, have many aspects of product differentiation, such as the brand, the
user interface and the perceived quality. The demand for one type of stereo may be
much larger than demand for another.
In contrast, one of the characteristics of a commodity good is that its price is
determined as a function of its market as a whole. Well-established physical
commodities have actively traded spot and derivative markets. Generally, these are
basic resources and agricultural products such as iron ore, crude oil, coal, salt,
sugar, tea, coffee beans, soybeans, aluminum, copper, rice, wheat, gold, silver,
palladium, and platinum. Soft commodities are goods that are grown, while hard
commodities are the ones that are extracted through mining.There is another
important class of energy commodities which includes electricity, gas, coal and oil.
Electricity has the particular characteristic that it is usually uneconomical to store;
hence, electricity must be consumed as soon as it is produced.
Commoditization (also called commoditization) occurs as a goods or services
market loses differentiation across its supply base, often by the diffusion of the
intellectual capital necessary to acquire or produce it efficiently. As such, goods
that formerly carried premium margins for market participants have become
commodities, such as generic pharmaceuticals and DRAM chips. Another example
suggested by the New York Times is multivitamin supplements; a 50 mg tablet of
calcium is of equal value to a consumer no matter what company produces and
markets it, and as such, multivitamins are now sold in bulk and are available at any
supermarket with little differentiation among brands. Following this trend,
16
nonmaterials are emerging from carrying premium profit margins for market
participants to a status of commoditization.
Different types of commodities traded

World over one will find that a market exits for almost all the commodities know
to us. These commodities can be broadly classified into following:
Agricultural (grains, and food and fiber)

Table: 4.1: Different types of commodities traded
Commodity
Main Exchange
Contract
Size
Corn
CBOT
5000 bu
Corn
EURONEXT
50 tons
Oats
CBOT
5000 bu
Rough Rice
Soybeans
Rapeseed
CBOT
CBOT
EURONEXT
Soybean Meal
CBOT
2000 cwt
5000 bu
50 tons
100 short
Soybean Oil
CBOT
60,000 lb
Wheat
CBOT
5000 bu
Milk
Cocoa
Coffee C
Cotton No.2
Sugar No.11
Sugar No.14
Frozen Concentrated
Orange Juice
Chicago Mercantile
Exchange
ICE
ICE
ICE
ICE
ICE
ICE
tons
Trading Symbol
C/ZC
(Electronic)
EMA
O/ZO
(Electronic)
RR
S/ZS (Electronic)
ECO
SM/ZM
(Electronic)
BO/ZL
(Electronic)
W/ZW
(Electronic)
200,000 lbs DC
10 tons
37,500 lb
50,000 lb
112,000 lb
112,000 lb
CC
KC
CT
SB
SE
15,000 lbs
FCOJ-A
Livestock and meat

17
Table: 4.2: Livestock and meat

Commodity Contract Size Currency
Lean Hogs
Live Cattle
Feeder Cattle
40,000 lb (20
tons)
40,000 lb (20
tons)
50,000 lb (25
tons)
USD ($)
USD ($)
USD ($)
Trading
Main Exchange
Chicago Mercantile
Symbol
LH
Exchange
Chicago Mercantile
LC
Exchange
Chicago Mercantile
FC
Exchange
Energy
Table: 4.3: Energy
Commodity
WTI Crude Oil
Brent Crude
Main
Exchange
NYMEX,
ICE
ICE
Ethanol
CBOT
Natural gas
NYMEX
Heating Oil
NYMEX
Contract Size Trading Symbol

1000 bbl
(42,000 U.S.
gal)
1000 bbl
CL (NYMEX),
WTI (ICE)
(42,000 U.S.
gal)
29,000 U.S.
AC (Open Auction)
gal
10,000
mmBTU
1000 bbl
(42,000 U.S.
ZE (Electronic)
NG
HO
gal)
1000 bbl
Gulf Coast Gasoline
NYMEX
(42,000 U.S.
LR
RBOB Gasoline (reformulated
NYMEX
gal)
1000 bbl
RB
gasoline blend stock for oxygen
(42,000 U.S.
18
Commodity
Main
Exchange
blending)
Contract Size Trading Symbol

gal)
1000 bbl
Propane
NYMEX
Purified Terephthalic Acid (PTA) ZCE
(42,000 U.S.
PN
gal)
5 Tons
TA
Precious metals
Table: 4.4: Precious metals
Commodity
Gold
Platinum
Palladium
Silver
Unit
troy ounce
troy ounce
troy ounce
troy ounce
Currency
USD ($)
USD ($)
USD ($)
USD ($)
Main Exchange
COMEX
COMEX
COMEX
COMEX
Industrial metals
Table: 4.5: Industrial metals
Commodity
Copper
Lead
Zinc
Tin
Aluminum
Aluminum alloy
Nickel
Cobalt
Molybdenum
Recycledsteel
Unit
Metric Ton
Metric Ton
Metric Ton
Metric Ton
Metric Ton
Metric Ton
Metric Ton
Metric Ton
Metric Ton
Metric Ton
Currency
USD ($)
USD ($)
USD ($)
USD ($)
USD ($)
USD ($)
USD ($)
USD ($)
USD ($)
USD ($)
Main Exchange
London Metal Exchange, New York
London Metal Exchange, New York
London Metal Exchange.,
Rotterdam
19
Other
Table: 4.6: Other
Commodity
Unit
Rubber
1 kg
Palm Oil
1000 kg
Wool
Polypropylene
Linear Low Density
Polyethylene (LL)
Currency
US cents ()
Malaysian Ringgit
(RM)
1 kg
AUD ($)
1000 kg USD ($)
1000 kg USD ($)
Bourse
*Singapore Commodity
Exchange
Bursa Malaysia
ASX
INTRODUCTION OF COMMODITY MARKET IN INDIA

The evolution of the organized futures market in India commenced in 1875 with
the setting up of the Bombay Cotton Trade Association Ltd. Following widespread
discontent among leading cotton mill owners and merchants over the functioning
of the Bombay Cotton Trade Association, a separate association, Futures trading in
Bombay Cotton Exchange Ltd., was constituted in 1983. Oilseeds originated with
the setting up of the Gujarati V yapari Mandali in 1900, which carried out futures
trading in ground nuts, castor seeds and cotton. The Calcutta Hessian Exchange
Ltd. and the East India Jute Association Ltd. were set up in 1919 and 1927
respectively for futures trade in raw jute.
Futures markets in Bullion began in Mumbai in 1920, and later, similar markets
were established in Rajkot, Jaipur, Jamnagar, Kanpur, Delhi and Calcutta. In due
course, several other exchanges were established in the country, facilitating trade in
diverse commodities such as pepper, turmeric, the futures trade in spices was first
organized by potato, sugar and jiggery. The India Pepper and Spices Trade
Association (IPSTA) in Cochin in 1957. However, in order to monitor the price
movements of several agricultural and essential commodities, futures trade was
20
completely banned by the government in Subsequent to the ban of futures trade,

many traders resorted to1966. Unofficial and informal trade in futures. However, in
Indias liberalization epoch as per the June. The commodity futures traded in
commodity exchanges are REGULATING BODY regulated by the Government
under the Forward Contracts Regulations Act, 1952 and the Rules framed there
under. The regulator for the commodities trading is the Forward Markets
Commission, situated at Mumbai, which comes under the Forward Markets
Ministry of Consumer Affairs Food and Public Distribution.
ABOUT COMMODITY FUTURES

Meaning of commodity futures
Any product that can be used for commerce or an article of commerce which is
traded on an authorized commodity exchange is known as commodity. The article
should be movable of value, something which is bought or sold and which is
produced or used as the subject or barter or sale. In short commodity includes all
kinds of goods. Forward Contracts (Regulation) Act (FCRA), 1952 defines
goods as every kind of movable property other than actionable claims, money
and securities.
In current situation, all goods and products of agricultural (including plantation),
mineral and fossil origin are allowed for commodity trading recognized under the
FCRA. The national commodity exchanges, recognized by the Central Government
permits commodities which include precious (gold and silver) and non-ferrous
metals, cereals and pulses, ginned and cotton, oilseeds, oils and oilcakes; raw jute
and jute goods; sugar; potatoes and onions; coffee and tea; rubber and spices etc.
Commodity futures are still a relatively unknown asset class, despite being traded
in the India for over 3 years. This may be because commodity futures are
strikingly different from stocks, bonds, and other conventional assets. Among
these differences are: (1) commodity futures are derivative securities; they are not
claims on long-lived corporations; (2) they are short maturity claims on real
assets; (3) unlike financial
assets,
many
commodities
have
pronounced
seasonality in price levels and volatilities.

21
The economic function of corporate securities such as stocks and bonds, that is,
liabilities of firms, is to raise external resources for the firm. Investors are bearing
the risk that the future cash flows of the firm may be low and may occur
during bad times, like recessions. These claims represent the discounted value
of cash flows over very long horizons. Their value depends on decisions of
management.
Investors are compensated for these risks.
Commodity futures are
quite different; they do not raise resources for firms to invest.
Rather,
commodity futures allow firms to obtain insurance for the future value of their
outputs (or inputs).
Investors in commodity futures receive compensation for
bearing the risk of short-term commodity price fluctuations.

Commodity futures do not represent direct exposures to actual commodities. Futures
prices represent bets on the expected future spot price. Inventory decisions link
current and future scarcity of the commodity and consequently provide a
connection between the spot price and the expected futures spot price, hence
commodity futures, display many differences.
OBJECTIVE OF COMMODITY FUTURES:
Hedging - price risk management by risk mitigation

Speculation - take advantage of favorable price movement
Leverage - pay low margin to enjoy large exposure
Liquidity - ease of entry and exit of market
Price stabilization along with balancing demand and supply position
Flexibility, certainty and transparency in purchasing commodities facilitate
bank financing.
Explain about the following in objectives as:
Hedging:
The hedger is a trader who enters the futures market in order to reduce a preexisting risk position. Having a position does not mean that the trader must
actually own a commodity. An individual or a firm who anticipates the need for a
certain commodity in the future or a person who plans to acquire a certain
commodity later also has a position in that commodity. In many cases, the hedger
has a certain hedging horizon the future date when the hedge will terminate. The
hedge can be a long hedge or a short hedge. If the hedger buys futures contract to
hedge, it will be a long hedge.
22
For example, a roller flourmill owner may like to lock-in the price of the wheat
that he wants to purchase three months later by purchasing wheat futures. If three
months later the wheat prices rise, carrying futures prices along with them, the
flourmill owner will purchase wheat from the spot market at a higher price. The
loss that he may suffer in the cash market will be compensated by sale of futures at
a higher price. Similarly, a farmer can sell three-month futures at the prevailing
price and lock-in his profits at that level. If the prices fall, the loss suffered by the
farmer in the cash market will be compensated by the profit that the farmer will
earn by squaring the transaction in the futures market.
In practice, hedging solutions are not as neat as the ones described above. In the
above example, the goods in question were exactly the same both in the cash and
the futures market, the amounts purchased / sold in the cash market matched the
futures contract amounts, and the hedging horizons of the farmer and the mill
owner matched the delivery dates of the futures contracts. It will be rare for all
factors to match perfectly; they will differ in time span covered, the amount of
commodity or the physical characteristics of the commodity that are traded in the
cash and the futures markets. Such hedges are known as cross-hedges. In such
cases, the hedger must trade the right number and kind of futures contract to
control the risk in hedged positions as much as possible. There can be situations
where the hedger does not have any definite hedging horizon and may enter into
what is known as risk-minimizing hedge.
The hedger has many incentives. Tax is a major incentive. In an un-hedged
situation, the profits fluctuate widely and the person / firm may have to pay taxes
in the high profit years while he is not able to utilize the tax credits when he runs
into losses. Hedging also serves to minimize the cost of financial distress. Widely
fluctuating profits may drive many persons / firms to bankruptcy. In an idealized
world with no transaction costs, which is inhabited by homo-economics this may
not be a factor. In the real world, bankruptcy involves avoidable human misery and
prolonged winding up procedures.
Role of Speculators:
Derivative markets have long been viewed with suspicion as speculators are the
most visible players. We consider it appropriate to emphasize that functioning
23
derivative markets will have speculators who need to be viewed from the point of
view of their economic usefulness and who need to be regulated with a view to
preventing systemic instability.
A speculator is a trader who enters the futures market in search of profit and, by so
doing, willingly accepts increased risks. Different types of speculators may be
categorized by the length of time they plan to hold a position. Traditionally, there
are three kinds of speculators: scalpers, day traders and position traders.
Scalpers time horizon is the shortest, ranging from the next few seconds to the
next few minutes and they make profits that may be only one or two ticks, the
minimum allowable price movement. If the prices do not move in the scalpers
direction within a few minutes of assuming a position, the scalper will like to close
the position and begin looking for a new opportunity. It is understood that scalpers
do not go by the demand and supply positions of the underlying commodity but act
on the sentiment.
They generate enormous amounts of transactions and are able to survive as they
pay minimum transaction cost. Besides earning profits for themselves, their main
role is to provide liquidity in the market. They provide a party willing to take the
opposite side of a trade for other traders; hedgers know that their orders can be
executed.
By actively trading, they generate price quotations thereby allowing markets to
discover prices more effectively. By competing for trades, they help close the bidask spread.
Day Traders close their position before the end of trading each day. Their strategy
is to guess the price movements on account of developments during the day,
including announcement of government policies and release of data. Position
Traders maintain overnight positions, which may run into weeks or even months.
They may hold outright positions in which they run huge risks and may also earn
big profits.
The more risk averse among them assume spread positions which may involve
relative price movements in different contracts on the same underlying
commodities or commodities which are closely related. It is pertinent to examine
24
whether hedgers need speculators. Theoretically, if there are sufficiently large

numbers of short and long hedgers, they may fulfill each others need and the
speculators may have no role. However, in practice, there is always a mismatch
between the time when the short and long hedgers would approach the market and
the speculators fill in this gap.
Leading commodity markets of world:
Some of the leading exchanges of the world are New York Mercantile Exchange
(NYMEX), the London Metal Exchange (LME) and the Chicago Board of Trade
(CBOT).
Leading commodity markets of India:
The government has now allowed national commodity exchanges, similar to the
BSE & NSE, to come up and let them deal in commodity derivatives in an
electronic trading environment. These exchanges are expected to offer a nationwide anonymous, order driven; screen based trading system for trading. The
Forward Markets Commission (FMC) will regulate these exchanges.
How commodity markets work?

There are two kinds of treads in commodities. The first is the spot tread, in which
one pays as and carries away the goods. The second future treads. The
underpinning for future is the warehouse receipts. A person deposit certain amount
of say, good X in a ware house and gets a warehouse receipts. Which allow in
asking for physical delivery of the good form the warehouse? But some trading of
commodity future need not necessarily process such a receipts to strike a deal. A
person can buy sell a commodity future an exchange based on his expectation of
where the price will go. Futures have something called an expiry data, by when the
buyer and seller either causes his account or give/take delivery of commodity. The
broker maintains an account of all dealing parities in which daily profit or loss due
to changes in the future price is record. Squaring off is done by taking an opposite
contract so that the net outstanding is nil.
Following diagram give idea about working of the commodity market.
25
Figure 4.1: Working Of the Commodity Market

Today commodity trading system is full computerized. Traders need not visit a
commodity market to speculate. With online commodity trading they could sit in
the confines of their home or office and call the shots.
Step the commodity trading system consists of certain prescribed steps or stages as
follows:
1. Trading: At this stage the following is the system implemented:
Order receiving
Execution
Matching
Reporting
Surveillance
Price limits
Position limits
2. Clearing house: At this stage the following is the system in place:
Matching
Registration
Clearing
26
Limit
Notation
Margining
Price limits
Position limit
Clearing house
3. Settlement: At this stage the following is the system follows:
Marking to market
Receipts to payment
Reporting
Delivery upon expiration or maturity.
About Commodity Trading Exchanges in India:

Brief descriptions of commodity exchanges are those which trade in particular
commodities, neglecting the trade of securities, stock index futures and options etc.
In India there are 25 recognized future exchanges, of which there are three national
level multi-commodity exchanges. After a gap of almost three decades,
Government of India has allowed forward transactions in commodities through
Online Commodity Exchanges, a modification of traditional business known as
Adhat and Vayda Vyapar to facilitate better risk coverage and delivery of
commodities.
The three exchanges are:
National Commodity & Derivatives Exchange Limited (NCDEX)

Multi Commodity Exchange of India Limited (MCX)
National Multi-Commodity Exchange of India Limited (NMCEIL)
THE DOLLAR MOVES INVERSELY TO COMMODITY

PRICES
Gold
27
Gold (also called bullion) is primarily a monetary asset and partly a commodity. Gold is the
world's oldest international currency. It is an important element of global monetary reserves.
It is considered as a commodity as it can be acquired and stored in the form of Jewellery,
Bars, Coins and Gold Deposits. It is also called precious metal, which means it does not rust
(oxidise) at normal conditions. It is resistant against many acids and a good electric
conductor, which makes it useful for electronic circuits. It is useful for jewelry because of
its inertness.
Economic Importance
Gold has mainly three types of uses- Jewelery Demand, Investment Demand and
Industrial uses
Medium of monetary exchange
It is an important element of global monetary reserves.
It is an effective portfolio diversifier.
Global Scenario
South Africa, the United States and Australia are the three largest gold producing countries.
Other major producers are Canada, China, Indonesia, and Russia. However in recent years,
China has become the worlds largest producer of gold, overtaking South Africas top
position in 2007.
Turkey has become an important net exporter. Vietnam, usually a large buyer; and Thailand
are also exporting gold now. Demand for gold is widely spread around the world. East Asia,
28
the Indian sub-continent and the Middle East accounted for 72% of world demand in 2007.
55% of demand is attributable to just five countries - India, Italy, Turkey, USA and China.
India is the worlds largest gold consumer, followed by China.
Domestic Scenario
India is arguably the largest bullion market in the world. It has been until now, the
undisputed single-largest Gold bullion consumer. In spite of being the largest consumer of
gold, India plays no major role globally in influencing this precious metal's pricing. Gold
production in India is very low. Karnataka, Jharkhand and Gujarat produce small quantity of
Gold. There is a huge mismatch between demand and primary supply in India, the balance
being made up by imports. India imports around 500-80every year.
Silver
Silver (Chemical symbol Ag) is a brilliant grey-white metal that is quite soft and malleable. Silver
is unique amongst metals due to the fact that it can be classified as both a precious metal and an
industrial metal. Silver has a number of unique properties including its strength, malleability and
ductility, its sensitivity to and high reflectance of light and the ability to endure extreme
temperature ranges. Its combination of unique properties makes it exceptional amongst metals
and difficult to substitute. The main source of silver is in lead ore, although it can also be found
associated with copper, zinc and gold and produced as a by-product of base metal mining
activities.
29
Economic Importance
Silver is sought as valuable and practical industrial commodity.
The four main uses of Silver are industrial, photography, silverware & jewelry and coins &
medals production.
It is an important element of global monetary reserves.
It is an effective portfolio diversifier.
Global Scenario
Peru is the world's biggest silver mining country with 3,557,000 tonnes of silver, accounting for
17% of total mined silver production. Other major silver mining countries are Mexico, China,
Chile and Australia. Mexico and Peru are very old silvers country (since 1500), and their silvers
production remains among the top five nations of silver for decades, even centuries.
Domestic Scenario
India hardly produces any silver and is basically a silver importing country. The country is one of
the largest importers of the white metal in the world. The three major silver producing states in
India are Rajasthan, Gujarat & Jharkhand. Rajasthan is the leading silver producing state in India.
Silver supply comes 77.1 % from imports, 18.8 % from secondary silver and 2.5% from
Hindustan Zinc. Hindrance too shares about 1.7% of market.
30
Copper
Copper, also known as Cu, is one of the oldest elements. It is reddish with a bright metallic
lustre colored solid. Copper occurs naturally in the Earths crust in a variety of forms. It can
be found in sulfide deposits, carbonate deposits, in silicate deposits and as pure Native
copper. From these, copper is obtained by smelting, leaching, and electrolysis. 80% of copper
cathodes outputs are refined from the sulfide concentrate, though the copper content is only 23%.
Economic importance
Copper is ductile, corrosion resistant, malleable and an excellent conductor of heat and
electricity.
It is very durable metal.
It has major applications in electrical and construction industries.
Global Scenario
Chile remains by far the largest mine producer of copper in the world. However, China is the
biggest producer of refined copper in the world closely followed by Chile. Other major
copper producing countries are Peru, Australia, Indonesia, Russia, China, Canada, Zambia
and Poland. In terms of consumption, Asia consumes over half of the world copper. China is
the single largest consumer with about 25% of the total global demand.
Domestic Scenario
31
India accounts for 3 percent of the global copper output. The annual production of copper is
approx. 708,000 tons in 2008. India is largely dependent in import of raw material to
manufacture copper and involved in importing copper ores and extracts copper out of them.
However, small quantities of copper that are produced in India are extracted from the copper
mines situated at Khetri and Malanjkhand in the country.
Nickel
Major Characteristics:
Nickel is used in various industries such as engineering, electrical, &

electronics, infrastructure, automobile & automobile components,
packaging, batteries etc.

Among all Basemetals, Nickel is the most volatile owing to its strong
demand & tight supply.

Nickel demand is derived demand based on growth of different industrial
sector thus exhibits high volatility.
32
65% of nickel is used in manufacturing of stainless steels & 20% in other

steel & non-ferrous including Super alloys; often for highly specialized
industrial, aerospace & military applications.
Global Scenario:
More than 54%, if world total supply comes from only five companies.
Global nickel consumption is growing by an average 3% a year.
Supply & Demand:
Major producers of nickel are Russia, Australia, New Caledonia, Canada,

and Indonesia, which represents over 65% of total world production.
World primary nickel consumption is about 1million tons. Consumption

centers are Japan 2 Lakh tons & European Union 3.74 Lakh tons.
Rapid expansion of global stainless steel production is fuelling demand for

primary nickel.
Important Nickel Market:
LME- London Metal Exchange
Indian Nickel Market:
Nickel Market in India is of total import dependent.
India Imports around 30,000 tons of Nickel.
Import duty on nickel is 15%.
With the growth in the stainless steel sector. Nickel import demand is
expected to increase in coming years.
33
Frequency distribution of Nickel at LME:

% Change
% Terms
> 5 2.5%
2%
2% 21.9% 76%
Factors influencing Nickel Markets:
Above ground supply from scrap.
New mines discovery.
Nickel demand is derived demand thus the situation in various industries.
Crude oil
Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground
reservoirs. Crude oil is the most important energy carrier at a global scale and since all kinds
of transport rely heavily on oil, the future availability of crude oil is of paramount interest.
Crude oil is classified by the location of its origin (e.g. West Texas Intermediate, WT or Brent)
and often by its relative weight or viscosity (light, intermediate or heavy).
Economic importance
Worlds primary energy consumption is supplied by crude oil.
34
Crude oil is used as diesel fuel (petrol-diesel), fuel oils, gasoline (petrol), jet fuel,
kerosene and liquefied petroleum gas (LPG).
Transport relies to well over 90 percent on oil.
Global Scenario
Saudi Arabia, Russia and United States are the top three crude oil producing countries in the
world. OPEC countries account for more than three quarters of oil reserves in the world.
OPEC has great influence on the world crude oil market. Saudi Arabia is also the major
exporter of crude oil followed by Russia, Iran, UAE and Nigeria. Among major consumers of
crude oil, the US tops the list followed by China, Japan, USSR and India.
Domestic Scenario
India reserves second highest crude oil deposits in Asia-Pacific after China. It is the sixth
largest consumer of crude oil in the world with about 70% of its local requirement met through
imports. The country consumed average of about 2.7 million barrels per day during 2006 and
2008. The country currently stands at third largest importer of crude oil in the world.
Currently, state-owned Oil and Natural Gas Corporation Ltd is the biggest producer of crude
oil (largely from the Mumbai High offshore fields).
Dollar
On 15 January 1520, the kingdom of Bohemia began minting coins from silver
mined locally in Joachimsthal. The coins were called "Joachimsthaler," which
became shortened in common usage to thaler or taler. The German name
35
Joachimsthal literally means Joachim's valley or Joachim's dale. This name found
its way into other languages: Czech tolar, Hungarian tallr, Danish and Norwegian
(rigs) daler, Swedish (riks) daler, Icelandic dalur, Dutch (rijks)daalder or daler,
Ethiopian ("talari"), Italian tallero, Flemish daelder, Polish Talar, Persian Dare, as
well as - via Dutch - into English as dollar.
A later Dutch coin depicting a lion was called the leeuwendaler or leeuwendaalder,
literally 'lion dealer'. The Dutch Republic produced these coins to accommodate its
booming international trade. The leeuwendaler circulated throughout the Middle
East and was imitated in several German and Italian cities. This coin was also
popular in the Dutch East Indies and in the Dutch New Netherland Colony (New
York). It was in circulation throughout the Thirteen Colonies during the 17th and
early 18th centuries and was popularly known as lion (or Lyon) dollar. The modern
American-English pronunciation of dollar is still remarkably close to the 17th
century Dutch pronunciation of dealer. Some well-worn examples circulating in
the Colonies were known as "dog dollars".
Spanish pesos - having the same weight and shape - came to be known as Spanish
dollars. By the mid-18th century, the lion dollar had been replaced by Spanish
dollar, the famous "piece of eight", which was distributed widely in the Spanish
colonies in the New World and in the Philippines.
CORRELATION:
If the change in values of two variables are simultaneous and when the changes in
one are due to changes in other, the variable are said to be correlation.
x
2
2
n ( y )
n ( x2 )
n xy( x)( y )
r=
36
Correlation coefficient r
The correlation coefficient r is a measure of the linear relationship between two
attributes or columns of data. The correlation coefficient is also known as the
person product moment correlation coefficient. The value of r can range from -1 to
+1 and is independent of the unit of measurement. A value of r near 0 indicates
little correlation between attributes, a value near +1 0r -1 indicates a high level of
correlation.
Interpretation or r:
The value of the correlation of coefficient always lies between -1 to +1. The
interpretation of the value of r is given below:
Value of r is positive implies that there is positives correlation between the
variable.
When r =1, it means there is perfect positive correlation between the variable.
When r is negative it means there is negative correlation between the variable.
When r = -1, it means there is perfect negative correlation between the variable.
When r = 0, it means there is no correlation.
Types of correlation
Positive correlation:
If x and y have a strong positive linear correlation, r is close to +1. An r value of
exactly +1 indicates a perfect positive fit. Positive value indicates a relationship
between x and y variable such that as values for x increases, value for y also
increases.
Negative correlation:
If x and y have a strong negative linear correlation, r is close to -1. An r value of
exactly -1 indicates a perfect negative fit. Negative value syndicates a relationship
between x and y such that as values for x increases, value for y also decreases.
No correlation:
If there is no linear correlation or a weak linear correlation, r is close to 0. A value
near zero means that there is a random, nonlinear relationship between the two
variables. Note, that r is a dimensionless quantity, it does not depend on the units
employed.
A perfect correlation of
1 occurs only when the data point all ile exactly on a
straight line. If r = +1, the slope of this line is positive. If r = -1, the slope of this
37
line is negative. A correlation greater than 0.8 is generally described as strong,

where as a correlation less than 0.5 are generally described as week.
BETA:
It is a measure of volatility, or systematic risk, of a security or a portfolio in
comparison to the market as a whole. But is used in the capital asset pricing model
(CAPM), a model that calculates the expected return of an asset based on its beta
and expected market return.
Beta is calculated using regression analysis, and you can think of beta as the
tendency of a securitys returns to respond to swings in the market. A beta of 1
indicates that the securitys price will move with the market. A beta of less than 1
means that the security will be less volatile than the market. A beta of greater than
1 indicates that the securitys price will be more volatile than the market.
x
n x 2
x xy x y
=
RESEARCH:
Research always starts with problem, its purpose to find the answer of the
question with application of scientific method, it is systematic and intensive study
directed towards more complex knowledge of the subject studied.
RESEARCH METHODOLOGY:
The system of collecting data for research projects is known as methodology. The
data may be collected for either theoretical or practical research for example
management research may be strategically conceptualized along with operational
planning methods and change management.
1) MAIN OBJECTIVE:
To analyze impact of dollar on price of different commodities.
2) SUBSIDERY OBJECTIVE:
38
To find out the correlation between dollar and price of different commodities.
To find out risk between dollar and price of different commodities on the
basis of beta.
To analysis price fluctuation on the basis of graph to represent its affects.
Research plan:
RESEARCH DESIGN:
The research design is the method and process for the conducting particular
study. Broadly speaking, it is can be grouped in the three main categoryexploratory, descriptive, causal.
EXPLORATORY:
An exploratory research is the discovery on new idea and generally based on

the secondary data.
DESCRIPTIVE:
Descriptive study is use when researcher interested in knowing the features of

certain group like sex, age, educational level, occupation etc.
CAUSAL:
As the name implies a causal design investigates the cause and effect relationship
between two or more variable.
In this report as a research design the CAUSAL DESIGN is well suitable, because
a whole report is based on to find out impact of exchange rate on IT sector equity
share prices.
SOURCES OF DATA:
SOURCES OF DATA:
In the research it is very important to determine the research had collected primary
data or secondary data. Sometimes, the research study is based on both data.
The source of data can be divided in the two categories.
39
a) Primary data:
The primary data are those data which are collected by the any researcher first
time and before it no one have collected those data is known as the primary data.
b) Secondary data:
The secondary data are those which are already collected and used for some other
context.
This report is based on secondry data. Here, data is collected from MCX and
MCX-SX web-sites from internet and MCX annual report.
SAMPLING SIZE:
Monthly closing price of exchange rate (USD-INR) from 2009 to 2013.
Monthly closing price of selected commodities from 2009 to 2013.
Sampling design
A) Probability
Probability of every unit in the population being included in the sample size
is known. There are four types of this method:
a) Sample random sampling
b) Systematic sampling
c) Stratified sampling
d) Cluster sampling
B) Non probability
There aer foue thpes of this method:
a) Convenience sampling
b) Judgments sampling
c) Quota sampling
d) Snowballs sampling
40
Method used in this study:

In this report,the non probability converience sampling design has been used
because selecting whatever sampling unit are conveniently avaible.
Benefits of study:
The study carried out under the title of An analysis of impact of dollar on prices
of different commodities will give benefits are as under:
Investor can have an idea about how dollar affects price of different
commodities
This study will help the investor correlate dollar and price of commodity so
they can easily identify the correlation between them and invest easily.
By reflecting the factors investors can take the decision about any trading in
gold, silver, crude oil, copper, nickel, etc.
The study will be helpful in knowing that what the risk level of dollar to price
of different commodity.
Limitation of study
That their can be some limitations in this report that may be due to
knowledge level or some other factors which are as follow.
The various sources utilized for this study, which include, website,
information from commodity takers, market watchers and
economists, are subjects to personal basis.

There are manufacturers affects price of commodities but in this
study only dollar is considered and other factors are constant.

The study was not intended as research project as it involves
substantial data collected and data analysis
41
1. Correlation between USD/INR and Gold for JAN-09 to DEC-12

Table- 6.1: Correlation between USD/INR and Gold
YEAR/
MONTH
Xi
USD/
Yi
GOLDS
X
%CHANGE
Y
%CHANGE
9-Jan
9-Feb
9-Mar
9-Apr
9-May
9-Jun
9-Jul
9-Aug
9-Sep
9-Oct
9-Nov
9-Dec
10-Jan
10-Feb
10-Mar
10-Apr
INR
(Rs.)
49.02
50.73
50.95
50.22
47.29
47.87
48.16
48.88
48.04
46.96
46.48
46.68
46.37
46.23
45.14
44.44
PRICE
(Rs.)
14276
15216
15066
14220
14845
14558
14680
15160
15020
15965
17650
16405
16230
16589
16300
17015
IN
USD/INR
0
3.48
0.43
-1.43
-5.83
1.22
0.60
1.49
-1.71
-2.24
-1.02
0.43
-0.66
-0.30
-2.35
-1.55
IN
GOLD
0
6.58
-0.98
-5.61
4.39
-1.93
0.83
3.26
-0.92
6.29
10.55
-7.05
-1.06
2.21
-1.74
4.38
XY
X2
Y2
0
22.96
-0.42
8.04
-25.64
-2.37
0.50
4.88
1.58
-14.14
-10.78
-3.03
0.70
-0.66
4.10
-6.80
0
12.16
0.18
2.05
34.03
1.50
0.36
2.23
2.95
5.05
1.04
0.18
0.44
0.09
5.55
2.40
0
43.35
0.97
31.53
19.31
3.73
0.70
10.69
0.85
39.58
111.38
49.75
1.137
4.89
3.03
19.24
42
10-May
10-Jun
10-Jul
10-Aug
10-Sep
10-Oct
10-Nov
10-Dec
11-Jan
11-Feb
11-Mar
11-Apr
11-May
11-Jun
11-Jul
11-Aug
11-Sep
11-Oct
11-Nov
11-Dec
12-Jan
12-Feb
12-Mar
12-Apr
12-May
12-Jun
12-Jul
12-Aug
12-Sep
12-Oct
12-Nov
12-Dec
13-Jan
13-Feb
13-Mar
13-Apr
13-May
13-Jun
13-Jul
13-Aug
13-Sep
13-Oct
46.45
46.6
46.46
47.08
44.92
44.54
46.04
44.81
45.95
45.18
44.65
44.38
45.03
44.72
44.15
46.02
48.92
48.87
52.17
53.27
49.15
49.37
50.75
52.28
56.1
55.8
55.65
55.85
52.27
53.92
54.17
54.96
54.31
53.77
54.4
54.37
55.01
58.39
59.77
63.2
63.75
61.61
18177
18105
17768
18220
19165
19680
20100
20575
19620
20800
20360
22715
22105
21041
23211
26761
25351
27201
28441
27170
28117
28047
28010
29156
29152
29661
29835
31161
31223
31143
31150
30763
30727
30270
29951
27705
26815
27270
26912
30161
30673
29584
4.52
0.32
-0.30
1.33
-4.58
-0.84
3.36
-2.67
2.54
-1.64
-1.17
-0.60
1.46
-0.68
-1.27
4.23
6.30
-0.10
6.75
2.10
-7.73
0.44
2.79
3.01
7.30
-0.53
-0.26
0.35
-6.41
3.15
0.46
1.45
-1.18
-0.95
1.17
-0.05
1.17
6.14
2.36
5.73
0.87
-3.35
6.82
-0.39
-1.86
2.54
5.18
2.68
2.13
2.36
-4.64
6.01
-2.11
11.56
-2.68
-4.81
10.31
15.29
-5.26
7.29
4.55
-4.46
3.48
-0.24
-0.13
4.09
-0.01
1.74
0.58
4.44
0.19
-0.25
0.02
-1.24
-0.11
-1.49
-1.05
-7.49
-3.21
1.69
-1.31
12.08
1.69
-3.55
30.88
-0.12
0.55
3.39
-23.79
-2.27
7.18
-6.31
-11.80
-10.07
2.48
-6.99
-3.93
3.31
-13.14
64.78
-33.20
-0.74
30.78
-9.42
-26.95
-0.11
-0.36
12.33
-0.10
-0.93
-0.15
1.59
-1.27
-0.80
0.01
-1.81
0.13
1.47
-1.23
0.41
-3.78
10.42
-3.10
69.28
1.47
11.99
20.45
0.10
0.09
1.78
21.04
0.71
11.34
7.13
6.47
2.80
1.37
0.36
2.14
0.47
1.68
17.93
39.71
0.01
45.59
4.44
59.81
0.20
7.81
9.08
53.38
0.28
0.07
0.12
41.08
9.96
0.21
2.12
1.39
0.98
1.37
0.03
1.38
37.75
5.58
32.93
0.75
11.26
46.63
0.15
3.46
6.47
26.90
7.22
4.55
5.58
21.54
36.17
4.47
133.79
7.21
23.16
106.34
233.92
27.76
53.25
20.78
19.97
12.14
0.06
0.017
16.73
0.0001
3.04
0.34
19.75
0.03
0.06
0.0005
1.54
0.01
2.21
1.11
56.23
10.31
2.87
1.72
145.7
2.88
12.60
43
13-Nov
13-Dec
62.68
61.9
29989
30120
1.73
-1.24
1.36
0.43
26.091
81.478
2.37
-0.54
70.746
3.01
1.54
538.13
1.87
0.19
1421.16
Xi = USD/INR
Yi = GOLDS PRICE
X = % CHANGE IN USD/INR
Y = % CHANGE IN GOLDS PRICE
n = 59
n xy( x )( y )
r=
( n ( x )( x ) )( n ( y )( y ) )
2
( 59 ) ( 70.74 )( 26.09 ) ( 81.47 )

=
( ( 59 )( 539.13 ) ( 26.09 )2 )( ( 59 ) ( 1421.16 )( 81.47 )2 )
= 0.41
n xy x y
2
n x2( x )
( 59 ) (70.74 )( 26.09 ) ( 81.47 )

( 59 ) ( 539.13 ) ( 26.09 )2
= 0.06
Interpretation:
The above table 6.1 calculations in correlation & regression and beta are as:
1. The magnitude of the correlation for the time period of JAN-2009 to DEC2013 between USD/INR and golds price is = 0.41
2. This indicates that USD/INR and price of gold are related to one another in
a positive manner. That means appreciation in USD/INR leads to rise in
golds price and vice-versa.
44
3. Here, beta is 0.06 that indicates that if USD/INR appreciates by is reflected

by 0.06 price increase in gold.
2. Correlation between USD/INR and Silver for JAN-09 to DEC12

Table-6.2: Correlation between USD/INR and Silver
YEAR/
MONTH
Xi
USD/
9-Jan
9-Feb
9-Mar
9-Apr
9-May
9-Jun
9-Jul
9-Aug
9-Sep
9-Oct
9-Nov
9-Dec
10-Jan
10-Feb
10-Mar
10-Apr
10-May
10-Jun
10-Jul
INR
(Rs.)
49.02
50.73
50.95
50.22
47.29
47.87
48.16
48.88
48.04
46.96
46.48
46.68
46.37
46.23
45.14
44.44
46.45
46.6
46.46
Yi
SILVER
S
PRICE
(Rs.)
19682
21709
21890
20884
23205
22357
22155
23575
26040
25999
28250
26870
25500
25839
26875
28235
29263
29575
28644
X
Y
%CHANGE %CHANGE
IN
USD/INR
IN
SILVER
0
3.48
0.43
-1.43
-5.83
1.22
0.60
1.49
-1.71
-2.24
-1.02
0.43
-0.66
-0.30
-2.35
-1.55
4.52
0.32
-0.30
0
10.29
0.83
-4.59
11.11
-3.65
-0.90
6.40
10.45
-0.15
8.65
-4.88
-5.09
1.32
4.00
5.06
3.64
1.06
-3.14
XY
X2
Y2
0
12.16
0.18
2.05
34.03
1.59
0.36
2.23
2.95
5.05
1.05
0.18
0.44
0.09
5.58
2.40
20.45
0.10
0.090
35.92
0.36
6.58
-64.84
-4.48
-0.54
9.58
-17.96
0.35
-8.84
-2.10
3.38
-0.40
-9.45
-7.84
16.46
0.34
0.94
106.06
0.69
21.12
123.51
13.35
0.81
41.08
109.32
0.024
74.96
23.86
25.99
1.76
16.07
25.60
13.25
1.13
9.90
45
10-Aug
10-Sep
10-Oct
10-Nov
10-Dec
11-Jan
11-Feb
11-Mar
11-Apr
11-May
11-Jun
11-Jul
11-Aug
11-Sep
11-Oct
11-Nov
11-Dec
12-Jan
12-Feb
12-Mar
12-Apr
12-May
12-Jun
12-Jul
12-Aug
12-Sep
12-Oct
12-Nov
12-Dec
13-Jan
13-Feb
13-Mar
13-Apr
13-May
13-Jun
13-Jul
13-Aug
13-Sep
13-Oct
13-Nov
13-Dec
47.08
44.92
44.54
46.04
44.81
45.95
45.18
44.65
44.38
45.03
44.72
44.15
46.02
48.92
48.87
52.17
53.27
49.15
49.37
50.75
52.28
56.1
55.8
55.65
55.85
52.27
53.92
54.17
54.96
54.31
53.77
54.4
54.37
55.01
58.39
59.77
63.2
63.75
61.61
62.68
61.9
30140
33350
37075
41805
46065
42950
49600
55900
70837
57910
51820
58218
61523
51469
56003
54505
50010
56423
58150
56783
55525
54257
52051
54025
58204
62819
59822
61693
57700
58699
57656
54481
47344
44084
42704
41686
49556
51567
48716
49112
50212
1.33
-4.58
-0.84
3.36
-2.67
2.54
-1.67
-1.17
-0.60
1.46
-0.68
-1.27
4.23
6.30
-0.102
6.75
2.10
-7.73
0.44
2.79
3.01
7.30
-0.53
-0.26
0.35
-6.41
3.15
0.46
1.45
-1.18
-0.99
1.17
-0.05
1.17
6.14
2.36
5.738
0.87
-3.35
1.73
-1.24
26.003
5.22
10.65
11.16
12.75
10.19
-6.76
15.48
12.70
26.720
-18.24
-10.51
12.34
5.67
-16.39
8.80
-2.67
-8.24
12.82
3.06
-2.35
-2.21
-2.28
-4.06
3.79
7.735
7.92
-4.77
3.19
-6.47
1.73
-1.77
-5.50
-13.09
-6.88
-3.13
-2.38
18.87
4.05
-5.52
0.81
2.23
115.089
6.96
-48.86
-9.44
42.99
-27.22
-17.20
-25.94
-14.90
-16.15
-26.72
7.23
-15.73
24.04
-102.97
-0.900
-18.06
-17.38
-99.17
1.37
-6.57
-6.67
-16.68
2.17
-1.01
2.77
-50.82
-15.06
1.45
-9.43
-2.04
1.76
-6.45
0.72
-8.10
-19.23
-5.63
108.341
3.51
18.55
1.41
-2.78
-410.47
1.78
21.04
0.71
11.34
7.13
6.47
2.80
1.37
0.36
2.19
0.47
1.62
17.93
39.71
0.01
45.59
4.44
59.81
0.20
7.81
9.08
53.38
0.28
0.07
0.12
41.08
9.96
0.21
2.12
1.39
0.98
1.37
0.003
1.38
37.75
5.58
32.93
0.75
11.26
3.017
1.54
538.13
27.27
113.40
124.75
162.76
103.83
45.72
239.72
161.33
714.00
333.02
110.59
152.43
32.22
267.05
77.60
7.15
68.01
164.44
9.36
5.52
4.90
5.26
16.53
14.38
59.83
62.86
22.76
9.78
41.89
2.99
3.15
30.32
171.60
47.41
9.79
5.68
356.42
16.409
30.56
0.66
5.01
4447.1
46
Xi = USD/INR
Yi = SILVERS PRICE
Y = % CHANGE IN SILVERS PRICE
n = 59
n xy( x )( y )
r=
( n ( x )( x ) )( n ( y )( y ) )
2
( 59 ) (410.47 )( 26.09 ) ( 115.08 )

=
( ( 59 )( 538.13 ) ( 26.09 )2 )( ( 59 ) ( 4447.17 )( 115.08 )2 )
= -0.30
n xy x y
2
n x2( x )
( 59 ) (410.47 )( 26.09 ) ( 115.08 )

( 59 ) ( 538.13 )( 26.09 )2
= -0.087
Interpretation:
1. The magnitude of the correlation for the time period of JAN-2009 to DEC2013 between USD/INR and silvers price is = -0.30
2. This indicates that USD/INR and price of silver are related to one another in a
positive manner. That means appreciation in USD/INR leads to rise in golds
price and vice-versa.
3. Here, beta is -0.087 that indicates that if USD/INR appreciates by is reflected
by 0.087 price decrease in silver.
47
3. Correlation between USD/INR and Copper for JAN-09 to DEC12

Table-6.3: Correlation between USD/INR and Copper
YEAR
MONTH
Xi
USD/
9-Jan
9-Feb
9-Mar
9-Apr
9-May
9-Jun
9-Jul
9-Aug
9-Sep
9-Oct
9-Nov
9-Dec
10-Jan
10-Feb
10-Mar
10-Apr
10-May
10-Jun
10-Jul
10-Aug
10-Sep
10-Oct
10-Nov
INR
(Rs.)
49.02
50.73
50.95
50.22
47.29
47.87
48.16
48.88
48.04
46.96
46.48
46.68
46.37
46.23
45.14
44.44
46.45
46.6
46.46
47.08
44.92
44.54
46.04
Yi
X
Y
COPPERS %CHANGE %CHANGE
PRICE
(Rs.)
158.7
170.65
198.85
213.05
229.1
245.75
274.1
314.9
289.05
306
319.25
344.6
312.05
333.1
353.05
327.55
318.55
299
339.2
347.4
362.6
366.6
379.55
IN
USD/INR
0
3.48
0.43
-1.43
-5.88
1.22
0.60
1.49
-1.71
-2.24
-1.02
0.43
-0.66
-0.30
-2.35
-1.55
4.52
0.32
-0.30
1.33
-4.58
-0.84
3.36
XY
X2
Y2
0
26.26
7.16
-10.23
-43.95
8.91
6.98
22.25
14.10
-13.18
-4.42
3.41
6.27
-2.03
-14.12
11.20
-12.42
-1.98
-4.03
3.22
-20.07
-0.93
11.89
0
12.16
0.18
2.052
34.03
1.50
0.36
2.23
2.95
5.05
1.04
0.18
0.44
0.09
5.55
2.40
20.45
0.10
0.09
1.78
21.04
0.71
11.34
0
56.69
273.07
50.99
56.75
52.81
133.08
221.56
67.38
34.38
18.74
63.05
89.22
45.50
35.87
52.16
7.54
37.66
180.76
5.84
19.14
1.21
12.47
IN
COPPER
0
7.52
16.52
7.14
7.53
7.26
11.53
14.88
-8.20
5.86
4.33
7.94
-9.44
6.74
5.98
-7.22
-2.74
-6.13
13.44
2.41
4.37
1.10
3.53
48
10-Dec
11-Jan
11-Feb
11-Mar
11-Apr
11-May
11-Jun
11-Jul
11-Aug
11-Sep
11-Oct
11-Nov
11-Dec
12-Jan
12-Feb
12-Mar
12-Apr
12-May
12-Jun
12-Jul
12-Aug
12-Sep
12-Oct
12-Nov
12-Dec
13-Jan
13-Feb
13-Mar
13-Apr
13-May
13-Jun
13-Jul
13-Aug
13-Sep
13-Oct
13-Nov
13-Dec
44.81
45.95
45.18
44.65
44.38
45.03
44.72
44.15
46.02
48.92
48.87
52.17
53.27
49.15
49.37
50.75
52.28
56.1
55.8
55.65
55.85
52.27
53.92
54.17
54.96
54.31
53.77
54.4
54.37
55.01
58.39
59.77
63.2
63.75
61.61
62.68
61.9
431.85
440.95
413.7
421.85
407.55
417.25
417.05
436.05
418.3
350.1
398.9
386.5
403.5
417.15
417.7
431.65
443.9
428.85
429.4
422.55
424.3
441.05
419.7
436.05
443.75
442.95
438.53
422.23
394.44
407.64
415.44
422.67
465.05
469.19
450.44
451.46
452.3
-2.67
2.54
-1.67
-1.17
-0.60
1.46
-0.68
-1.29
4.23
6.30
-0.10
6.75
2.10
-7.73
0.44
2.79
3.01
7.30
-0.534
-0.26
0.35
-6.41
3.15
0.46
1.45
-1.18
-0.99
1.17
-0.05
1.17
6.14
2.36
5.73
0.87
-3.35
1.73
-1.24
13.79
2.10
-6.17
1.97
-3.38
2.38
-0.047
4.55
-4.07
-16.30
13.93
-3.10
4.39
3.38
0.13
3.33
2.83
-3.39
0.12
-1.50
0.41
3.94
-4.84
3.89
1.76
-0.18
-0.99
-3.71
-6.58
3.34
1.91
1.74
10.02
0.89
-3.99
0.22
0.18
26.003
117.302
-36.81
5.36
10.35
-2.31
2.04
3.48
0.032
-5.80
-17.24
-102.78
-1.42
-20.99
9.27
-26.16
0.05
9.33
8.55
-24.77
-0.06
0.42
0.14
-25.30
-15.28
1.80
2.57
0.21
0.99
-4.35
0.36
3.93
11.75
4.11
57.54
0.77
13.41
0.39
-0.23
-142.235
7.13
6.47
2.80
1.37
0.36
2.14
0.47
1.62
17.93
39.71
0.019
45.59
4.44
59.81
0.20
7.81
9.08
53.38
0.28
0.07
0.12
41.08
9.96
0.21
2.12
1.39
0.98
1.37
0.003
1.38
37.75
5.58
32.93
0.75
11.26
3.016
1.54
538.13
189.89
4.44
38.19
3.88
11.49
5.66
0.008
20.75
16.57
265.823
194.29
9.66
19.34
11.44
0.017
11.15
8.05
11.49
0.019
2.54
0.17
15.58
23.43
15.17
3.11
0.039
0.99
13.81
43.315
11.19
3.66
3.02
100.53
0.79
15.97
0.051
0.034
2591.62
Xi = USD/INR
Yi = COPPERS PRICE
49
Y = % CHANGE IN COPPERS PRICE
n = 59
n xy( x )( y )
r=
( n ( x )( x ) )( n ( y )( y ) )
2
( 59 ) (142.25 ) ( 26.09 ) ( 117.30 )
( ( 59 ) ( 538.17 )( 26.09 )2 )( ( 59 ) (2591.62 ) ( 117.30 )2 )

= -0.17
n xy x y
2
n x2( x )
( 59 ) (142.25 ) (26.09 )( 117.30 )

( 59 ) ( 538.17 )( 26.09 )2
= -0.036
Interpretation:
1. The magnitude of the correlation for the time period of JAN-2009 to DEC2012 between USD/INR and coppers price is = -0.17
2. This indicates that USD/INR and price of copper are related to one another in a
negative manner. That means appreciation in USD/INR leads to fall in coppers
price and vice-versa.
3. Here, beta is -0.036 that indicates that if USD/INR appreciates by is reflected
by 0.036 price decrease in copper.
50
4. Correlation between USD/INR and Nickel for JAN-09 to DEC-12

Table-6.4: Correlation between USD/INR and Nickel
YEAR/
MONTH
Xi
USD/
INR
(Rs.)
9-Jan
9-Feb
9-Mar
9-Apr
9-May
9-Jun
9-Jul
9-Aug
9-Sep
9-Oct
9-Nov
9-Dec
10-Jan
10-Feb
10-Mar
10-Apr
10-May
10-Jun
10-Jul
10-Aug
10-Sep
10-Oct
10-Nov
10-Dec
11-Jan
11-Feb
11-Mar
49.02
50.73
50.95
50.22
47.29
47.87
48.16
48.88
48.04
46.96
46.48
46.68
46.37
46.23
45.14
44.44
46.45
46.6
46.46
47.08
44.92
44.54
46.04
44.81
45.95
45.18
44.65
Yi
X
Y
NICKEL %CHANGE %CHANGE
S
PRICE
IN
IN
(Rs.)
USD/INR
NICKEL
532.7
490.2
479.1
556.8
650.9
766.2
894.4
957.5
832.7
867
757
862.5
868.4
947.4
1125.7
1146.6
1003.1
905.3
955.1
974.9
1050.6
1010.5
1040.2
1118
1244
1302.8
1164.4
0
3.48
0.43
-1.43
-5.83
1.22
0.60
1.49
-1.71
-2.24
-1.02
0.43
-0.66
-0.301
-2.35
-1.55
4.52
0.32
-0.30
1.33
-4.58
-0.84
3.36
-2.67
2.54
-1.67
-1.17
0
-7.97
-2.26
16.21
16.9
17.71
16.73
7.05
-13.09
4.11
-12.68
13.93
0.68
9.09
18.81
1.85
-12.51
-9.78
5.50
2.073
7.76
-3.81
2.93
7.47
11.27
4.72
-10.23
XY
X2
Y2
0
-27.83
-0.98
-23.23
-98.60
21.72
10.13
10.54
22.39
-9.26
12.96
5.99
-0.414
-2.741
-44.37
-2.87
-56.60
-3.14
-1.65
2.76
-35.65
3.22
9.89
-19.98
28.67
-7.92
12.46
0
12.16
0.18
2.05
34.03
1.50
0.36
2.23
2.95
5.05
1.044
0.18
0.44
0.091
5.55
2.40
20.45
0.10
0.090
1.78
21.04
0.71
11.34
7.13
6.47
2.80
1.37
0
63.65
5.127
263.02
285.61
313.78
279.95
49.77
169.88
16.96
160.97
194.22
0.46
82.75
354.19
3.447
156.63
95.058
30.26
4.29
60.29
14.56
8.653
55.94
127.01
22.34
112.85
51
11-Apr
11-May
11-Jun
11-Jul
11-Aug
11-Sep
11-Oct
11-Nov
11-Dec
12-Jan
12-Feb
12-Mar
12-Apr
12-May
12-Jun
12-Jul
12-Aug
12-Sep
12-Oct
12-Nov
12-Dec
13-Jan
13-Feb
13-Mar
13-Apr
13-May
13-Jun
13-Jul
13-Aug
13-Sep
13-Oct
13-Nov
13-Dec
44.38
45.03
44.72
44.15
46.02
48.92
48.87
52.17
53.27
49.15
49.37
50.75
52.28
56.1
55.8
55.65
55.85
52.27
53.92
54.17
54.96
54.31
53.77
54.4
54.37
55.01
58.39
59.77
63.2
63.75
61.61
62.68
61.9
1179.5
1042.6
1033.6
1081.6
1014.6
895.5
939.5
883.3
973.6
1057
976.6
917.4
938.6
928.6
935.4
892
887
978.5
876.2
932.6
936.4
952.6
960.7
951.8
854.6
832.1
838.1
871
898.1
914.7
845
855.9
862.7
-0.60
1.46
-0.694
-1.27
4.23
6.30
-0.10
6.75
2.108
-7.73
0.44
2.79
3.033
7.30
-0.53
-0.26
0.35
-6.41
3.15
0.46
1.45
-1.18
-0.99
1.17
-0.055
1.177
6.14
2.36
5.73
0.87
-3.35
1.73
-1.24
1.29
-11.60
-0.86
4.64
-6.19
-11.73
4.91
-5.98
10.22
8.55
-7.60
-6.06
2.31
-1.04
0.73
-4.63
-0.56
10.31
-10.45
6.43
0.40
1.79
0.85
-0.92
-10.21
-2.63
0.72
3.92
3.11
1.84
-7.62
1.28
0.79
26.003
68.17
-0.78
-16.99
0.59
-5.91
-26.23
-73.97
-0.50
-40.39
21.55
-66.25
-3.40
-16.94
6.96
-7.78
-0.39
1.24
-0.20
-66.12
-33.007
2.98
0.59
-2.04
-0.845
-1.08
0.563
-3.09
4.43
9.27
17.85
1.60
25.57
2.249
-0.98
-465.97
0.36
2.14
0.473
1.67
17.93
39.71
0.010
45.59
4.44
59.81
0.20
7.81
9.088
53.38
0.28
0.07
0.12
41.08
9.96
0.214
2.12
1.39
0.98
1.37
0.003
1.38
37.75
5.58
32.93
0.75
11.26
3.01
1.54
538.13
1.68
134.71
0.745
21.09
38.37
137.79
24.14
35.78
104.51
73.37
57.85
36.74
5.34
1.13
0.53
21.52
0.31
106.41
109.30
41.43
0.16
2.99
0.72
0.85
104.28
6.93
0.51
15.40
9.68
3.41
58.06
1.66
0.63
4090.38
Xi = USD/INR
Yi = NICKELS PRICE
Y = % CHANGE IN NICKELS PRICE
52
n = 59
n xy( x )( y )
r=
( n ( x )( x ) )( n ( y )( y ) )
2
( 59 ) (465.97 )( 26.09 ) ( 68.17 )

=
( ( 59 )( 538.13 ) ( 26.09 )2 )( ( 59 ) ( 4090.38 ) ( 68.17 )2 )
= -0.34
=
n xy x y
2
n x2( x )
( 59 ) (465.97 )( 26.09 ) ( 68.17 )

( 59 ) ( 538.13 ) ( 26.09 )2
= -0.09
Interpretation:
1. The magnitude of the correlation for the time period of JAN-2009 to DEC2013 between USD/INR and nickels price is = -0.34
2. This indicates that USD/INR and price of nickel are related to one another
in a negative manner. That means appreciation in USD/INR leads to fall in
nickels price and vice-versa.
3. Here, beta is -0.09 that indicates that if USD/INR appreciates by is
reflected by 0.09 price decreases in nickel.
53
5. Correlation between USD/INR and Crude oil for JAN-09 to

DEC-12
Table- 6.5: Correlation between USD/INR and Crude oil
YEAR
MONTH
Xi
USD/
INR
(Rs.)
9-Jan
9-Feb
9-Mar
9-Apr
9-May
9-Jun
9-Jul
9-Aug
9-Sep
9-Oct
9-Nov
9-Dec
10-Jan
10-Feb
10-Mar
10-Apr
10-May
10-Jun
10-Jul
10-Aug
10-Sep
10-Oct
10-Nov
10-Dec
11-Jan
11-Feb
11-Mar
11-Apr
11-May
11-Jun
11-Jul
49.02
50.73
50.95
50.22
47.29
47.87
48.16
48.88
48.04
46.96
46.48
46.68
46.37
46.23
45.14
44.44
46.45
46.6
46.46
47.08
44.92
44.54
46.04
44.81
45.95
45.18
44.65
44.38
45.03
44.72
44.15
Yi
X
Y
CRUDE %CHANGE %CHANGE
OILS
PRICE
IN
IN
(Rs.)
USD/INR
CRUDE
OIL
2043
0
0
2271
3.48
11.16
2473
0.43
8.89
2540
-1.43
2.70
3136
-5.83
23.46
3403
1.22
8.51
3142
0.60
-7.66
3555
1.49
13.14
3205
-1.71
-9.84
3616
-2.24
12.82
3560
-1.02
-1.55
3726
0.43
4.66
3380
-0.66
-9.28
3683
-0.30
8.96
3768
-2.35
2.30
3816
-1.55
1.27
3436
4.52
-9.95
3559
0.32
3.57
3668
-0.30
3.06
3499
1.33
-4.60
3563
-4.58
1.82
3627
-0.84
1.79
3911
3.36
7.83
4034
-2.67
3.14
4086
2.54
1.28
4441
-1.67
8.68
4668
-1.17
5.11
5056
-0.604
8.31
4548
1.46
-10.04
4259
-0.68
-6.35
4226
-1.27
-0.77
XY
X2
Y2
0
38.93
3.85
-3.88
-136.90
10.44
-4.64
19.65
16.91
-28.82
1.58
2.006
6.16
-2.70
-5.44
-1.97
-45.03
1.15
-0.92
-6.14
-8.39
-1.51
26.37
-8.40
3.27
-14.55
-5.99
-5.02
-14.71
4.37
0.98
0
12.16
0.18
2.05
34.03
1.58
0.36
2.23
2.95
5.05
1.04
0.18
0.44
0.09
5.55
2.40
20.45
0.10
0.090
1.78
21.04
0.71
11.34
7.13
6.47
2.80
1.37
0.36
2.14
0.47
1.62
0
124.54
79.11
7.34
550.58
72.48
58.82
172.77
96.92
164.44
2.39
21.74
86.23
80.36
5.32
1.62
99.16
12.81
9.37
21.22
3.34
3.22
61.31
9.89
1.66
75.48
26.12
69.08
100.95
40.37
0.60
54
11-Aug
11-Sep
11-Oct
11-Nov
11-Dec
12-Jan
12-Feb
12-Mar
12-Apr
12-May
12-Jun
12-Jul
12-Aug
12-Sep
12-Oct
12-Nov
12-Dec
13-Jan
13-Feb
13-Mar
13-Apr
13-May
13-Jun
13-Jul
13-Aug
13-Sep
13-Oct
13-Nov
13-Dec
46.02
48.92
48.87
52.17
53.27
49.15
49.37
50.75
52.28
56.1
55.8
55.65
55.85
52.27
53.92
54.17
54.96
54.31
53.77
54.4
54.37
55.01
58.39
59.77
63.2
63.75
61.61
62.68
61.9
4091
4019
4556
5182
5264
4927
5227
5274
5514
5097
4695
4921
5358
4887
4666
4838
5015
5172
5153
5066
5003
5260
5611
6127
6885
6811
6226
6296
6381
4.239
6.30
-0.10
6.75
2.10
-7.73
0.44
2.79
3.01
7.30
-0.53
-0.26
0.35
-6.41
3.15
0.46
1.45
-1.182
-0.99
1.17
-0.05
1.17
6.14
2.36
5.73
0.87
-3.35
1.73
-1.24
26.003
-3.19
-1.76
13.36
13.74
1.58
-6.40
6.08
0.89
4.55
-7.59
-7.88
4.81
8.88
-8.79
-4.52
3.68
3.65
3.13
-0.36
-1.68
-1.24
5.13
6.67
9.19
12.37
-1.07
-8.58
1.12
1.35
129.634
-13.53
-11.09
-1.36
92.78
3.33
49.51
2.72
2.51
13.719
-55.25
4.21
-1.29
3.19
56.34
-14.27
1.70
5.33
-3.70
0.36
-1.97
0.06
6.04
41.00
21.73
70.99
-0.93
28.83
1.95
-1.68
141.902
17.93
39.71
0.010
45.59
4.44
59.81
0.20
7.81
9.08
53.38
0.28
0.072
0.12
41.08
9.96
0.21
2.12
1.39
0.98
1.3
0.003
1.38
37.75
5.58
32.93
0.75
11.26
3.01
1.54
538.13
10.20
3.097
178.53
188.79
2.50
40.9
37.07
0.80
20.70
57.19
62.20
23.17
78.85
77.27
20.45
13.58
13.38
9.80
0.134
2.85
1.54
26.38
44.52
84.57
153.05
1.15
73.77
1.26
1.82
3289.112
Xi = USD/INR
Yi = CRYDE OILS PRICE
Y = % CHANGE IN GOLDS PRICE
n = 59
55
n xy( x )( y )
r=
( n ( x )( x ) )( n ( y )( y ) )
2
( 59 ) ( 141.90 )( 26.09 ) ( 129.63 )

=
( ( 59 )( 538.13 ) ( 26.09 )2 )( ( 59 ) ( 3289.11 ) (129.63 )2)
= 0.06
n xy x y
2
n x2( x )
( 59 ) (141.90 )( 26.09 ) (129.63 )

( 59 ) ( 538.13 )( 26.09 )2
= 0.01
Interpretation:
1. The magnitude of the correlation for the time period of JAN-2009 to DEC2013 between USD/INR and crude oils price is = 0.06
2. This indicates that USD/INR and price of crude oil are related to one
another in a negative manner. That means appreciation in USD/INR leads
to fall in crude oils price and vice-versa.
3. Here, beta is 0.01 that indicates that if USD/INR appreciates by is reflected
by 0.01 price increase in crude oil.
56
FINDINGS
The study carried out under the title of An analysis of impact of dollar on prices
of different commodities following point are found.
It is found that the relation between Dollar and Golds price through the
correlation function, there is positive relationship between them and also
found the systematic risk between Dollar-Golds by using beta which is as
follows.
Table- 7.1: Impact of exchange rate on gold price
Dollar and Gold
Correlation
Beta
0.41
0.06
From above tabal-7.1, it can be interpreted that the relationship between

USD/INR and prices of previous metal like gold and silver are positive
because appreciation in dollar lead to fall in its demand which in turn result
in rise in commodities price.

It is also found there is negative relation between Dollar and Silvers price,
Dollar and Coppers price, Dollar and Nickels price, Dollar and Cured oils
price and also found the systematic risk between, Dollar and Silver, DollarCopper, Dollar-Nickel and Dollar-Crude oil by using beta which are as
follows.
Table- 7.2: Impact of exchange rate on silver, copper, nickel,

crude oil price
Correlation
Beta
Dollar and Silver
-0.3
-0.08
Dollar and Copper
-0.17
-0.03
Dollar and Nickel
-0.34
-0.09
57
Dollar and Crude oil
-0.06
-0.01
Here, form above table-7.2, the correlation between USD/INR and Nickels
price is more negative as compare to other non-precious and the systematic
risk in Dollar-Copper is higher as compare to non-precious metals which
are above in table.
58
CONCLUSION
Investment in India has traditionally meant property, gold and bank

deposits. The more risk taking investors choose equity trading. But
commodity form a part of conventional investment instrument. It is evident
from the above data analyses that commodities are additively correlated
with dollar. On the basis of the observations of the correlation and beta it is
found that any appreciation or depreciation in dollar leads to international
currency market so that any change in dollar affect the Indian commodity
market.
To investing in gold and silver is high level of price fluctuation so the
change in price of gold and silver may affect the investor investment. The
investing in commodity market is requiring the more money so the small
investor is not able to invest in commodity market. As seen the present
scenario, there is a fluctuation due to global factor in dollar that is likely to
continue in future so, price of commodities will be also affected by it in
future.
A soft invest rate raging and a weak US dollar have increased the demand
for the commodities. A rising dollar is noninflationary. As a result a rising
dollar eventually produces product lower commodity prices. Lower
commodity prices, in turn, lead to lower rates and higher bond prices.
Higher bond prices are bullish for stocks. A falling dollar has the exact; it is
bullish for commodities and bearish for bound and equities. Why, then
cant we say that a rising dollar is bullish for bound and stock just forget
about commodities? The reason lies with long lead time in these
relationships and with the troublesome question of inflation.
59
RECOMMENDATION
Form the result that are obtained it is advisable to investor that can invest in
either of the commodity looking at the trend of any one to them. Because
there dollar and commodities prices are negatively correlated with each
other so, if one dollar become stung then commodities pieces will be
down. So, when there is highly fluctuation in dollar, it is recommended
investor to take care in investing in commodities.

Precious metals like gold and silver have performed well since we
identified the beginning of the bull market in gold and continues to look
like a good long-term bet. I suspect that people will make money in
precious and other precious metal investment this with remember that there
is negative relation between Dollar and Commodities price.

As we know that there is negative relationship between dollar and price of
commodities so, any change in dollar leads to inverse change in
commodities price so, it is recommended investees to keep it in mind while
investing in commodity market.

In India currently the mostly tread sector in bullion, metal and currency
market. So, it very good sector for investment for investor.

One has to consider the social & national characteristics while investing in
the commodities like gold & silver as in countries like India people do
investment in such commodities considering such metal as good option for
wealth creation without considering price fluctuation.

In the last I want to recommend that every inventor have to see the current
factors and then invest.
BIBLIOGRAPHY
60
Books:
G.C.Beri. (2006), Marketing Research Third Edition, New Delhi, Tata McGrawHill Publishing Company Limited. Page no: 52-60.
Naresh k. malhotra Marketing Research Third Edition, New Delhi, Tata
McGraw-Hill Publishing Company Limited. Page no: 108, 109, 110, 112, 119, 120,
121, 122, 123.
Websites:1.
2.
3.
4.
5.
6.
http://www.mcxina.com/market data
http://www.myiris.com/commodities/statidata.php?icode=gold
http://en.wikipedia.org/wiki/beta_coefficient
http://www.commodityonline.com/commodities/bullion/1.html
http://www.mcx-sxindia.com/market data
http://www.commoditytrademantra.com/commodity-markets/closingprices-mcx
7. http://www.commodityonline.com/commodity-market/commodityprices/gold
8. http://www.commodityonline.com/commodity-market/commodityprices/nikal
9. http://www.commodityonline.com/commodity-market/commodityprices/silver
10. http://www.commodityonline.com/commodity-market/commodityprices/crudeoil
11. http://www.commodityonline.com/commodity-market/commodityprices/copper
61

To Analyze Impact of Dollar On Price of Different Commodities.

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To Analyze Impact of Dollar On Price of Different Commodities.

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EXECUTIVE SUMMARY

Our endeavor is to analyze impact of USD/INR on prices of different commodities

Commodities market in India

Figure No 2.1: Commodities Market In India

DIFFERENT SEGEMEBTS IN COMODITIES MARKET

LEADING COMMODITY MARKETS OF WORLD

Table: 2.1 Leading Commodity Markets of World

Global Commodity Exchanges

New York Mercantile Exchange (NYMEX)

London Metal Exchange (LME)

Chicago Board of Trade (CBOT)

New York Board of Trade (NYBOT)

Kansas Board of Trade

Winnipeg Commodity Exchange, Manitoba

Dalian Commodity Exchange, China

Bursa Malaysia Derivatives Exchange

Singapore Commodity Exchanges (SICOM)

Chicago Mercantile Exchange (CME),US

Tokyo Commodity Exchanges (TOCOM)

Shanghai Futures Exchanges

Sydney futures Exchanges

London International Financial Futures and Options Exchanges (LIFFE)

National Multi-Commodity Exchange in India (NMCE),India

National Commodity and Derivatives Exchange (NCDEX),India

Multi-Commodity Exchange of India Limited (MCX),India

Dubai gold & Commodity Exchange (DGCX)

London Metal Exchange

Table 2.2: Regulators

Australia securities and investment commission

China securities regulatory commission

Security and exchange board of India and forward

Security and exchange commission of Pakistan

Monetary authority of Singapore

Financial services authority

Commodity future trading commission

Securities and futures commission

LEADING COMMODITY MARKET OF INDIA

Table: 2.3: Leading Commodity Market of India

Commodity Market in India

Multi Commodity Exchange (MCX), Mumbai

National Commodity and Derivatives Exchange Ltd (NCDEX), Mumbai

National Board of Trade (NBOT), Indor

National Multi Commodity Exchange (NMCE), Ahmadabad

Multi Commodity Exchange

The exchange's main competitor is National Commodity & Derivatives

MCX COMDEX is India's first and only composite commodity futures

Table: 2.4: Multi Commodity Exchange

Steel Gold, Gold HNI, Gold M, i-gold, Silver,

Potato (Agra), Potato (Tarkeshwar)

National Commodity and Derivatives Exchange

The NCDEX System

MCX Stock Exchange

MCX Stock Exchange Limited (MCX-SXAT) is an Indian stock exchange. It

over-the-counter (OTC) market as the structure and pricing of an exchange-traded

C9 FINANCIAL PRIVATE LIMITED

added services to its customers with courtesy and respect.

risk taking as they are essential for a strong positive future.

B. MISSION OF THE COMPANY:

goal of each party.

its ability to meet or exceed their expectation of service, and expertise.

C. VALUES OF THE COMPANY:

D. SERVICES PROVIDED BY THE COMPANY:

EQUITY & DERIVATIVE TRADING